Best Mutual Fund Picks: AlphaProfit to Provide New Mutual Fund Picks on 11-18-10
The AlphaProfit No Load Fund Growth model portfolio will be reconstituted on November 18 with best-of-breed no-load domestic, foreign, and specialty mutual fund picks.
The Federal Reserve's quantitative easing plan to perk up the economy and the job market has been the key driver of financial markets in recent months.
Markets started to discount the Fed's quantitative easing maneuver after Chairman Bernanke outlined his stimulus plan at Jackson Hole, WY on August 27. On November 3, Bernanke laid out the specifics of his $600 billion plan to lower long-term interest rates through large-scale asset purchases.
Since August 27, the dollar is down as reflected by the PowerShares DB US Dollar Bullish ETF's (UUP) 5% decline. Gold's rally to an all time high has helped SPDR Gold Shares ETF (GLD) to a 8% gain.
In the bond market, rising inflation fears have caused yields on longer maturity bonds to tick up. The iShares 20+ Year Treasury Bond ETF (TLT) is down 9% in price.
Bernanke explained the Federal Reserve's decision in his Washington Post op-ed on November 4 saying that easier financial conditions will promote economic growth as housing becomes more affordable, lower corporate bond rates encourage investment, and higher stock prices boost consumer wealth and help increase confidence.
Dr. Sam Subramanian, Managing Principal of AlphaProfit Investments, LLC and Editor of the AlphaProfit's Premium Service Investment Newsletter believes the Federal Reserve's strategy carries risks.
"While the inflation risk is often talked about, my bigger fear is the role the Federal Reserve is playing in boosting stock prices. Such a strategy can end badly for all except short sellers", says Dr. Subramanian.
For now, global stock markets appear to be somewhat complacent with the Fed's quantitative easing plan. In the U. S., the SPDR S&P 500 ETF (SPY) that tracks its namesake benchmark is up 11% since late August. Developed and emerging market proxies, iShares MSCI EAFE ETF (EFA) and iShares MSCI Emerging Markets ETF (EEM), are up 11% and 12%, respectively.
The rapid rise in stock prices has helped the 50-day moving average of popular U. S. and global stock market benchmarks to cross above the 200-day moving average. While it is difficult to take a bearish posture against this technical backdrop, investors need to note that a lot can go wrong for this market.
It is not at all clear if the Fed's unorthodox policies will prove effective in reducing unemployment.
For one, mergers spurred by lower corporate bond rates can lead to layoffs down the road as buyers seek to improve margin through productivity enhancement. With regulatory changes curtailing growth opportunities in sectors like financial services and health care, companies also have the onus of investing capital in sound projects. If not, 'easy money' will create jobs that are just fleeting, not enduring.
"If the Fed's policies prove ineffective in spurring job creation, one can end up with high inflation and a stagnant job market... the worst of both worlds", says Dr. Subramanian.
Best Mutual Funds Picks
With the leadership of quantitative easing investment plays recently showing signs of fading, AlphaProfit's No Load Global Growth Portfolio will be repositioned with new mutual funds picks on November 18.
Incorporating best-of-breed no load, no transaction fee domestic, foreign, and specialty mutual funds, this portfolio is up 53% since 2009.
AlphaProfit subscribers have benefited from gains made by domestic funds like Aston/Optimum Mid Cap (CHTTX) and Baron Opportunity (BIOPX) that are each up nearly 90% as well as foreign funds like Matthews India MINDX and Wasatch International Growth (WAIGX) that are up nearly 170% and 115%, respectively.
The AlphaProfit Portfolio's performance compares quite favorably with the 30% advance scored by its benchmark consisting of broad domestic and foreign indexes.
Looking ahead to AlphaProfit portfolio's repositioning and new mutual fund picks Dr. Subramanian remarked, "In an environment where the longevity of the bull-run can be quickly curtailed by macro-economic forces, it is important to maintain an appropriate mix and balance of assets. We believe we can help our readers successfully protect their assets against the vagaries of the stock market as well as inflation through prudent asset allocation and diversification."
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AlphaProfit Investments, LLC is an independent investment research firm based in Sugar Land, TX. AlphaProfit publishes the AlphaProfit Sector
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